Mortgage Information

Mortgage Changes that Affect the Consumer
In an effort to protect the mortgage-loan consumer, numerous new regulations have been enacted. Below are just a few.

When ordering appraisals, the Home Valuation Code of Conduct requires the use of an appraisal management company to provide a buffer between the loan officer and the appraiser. The intent is to protect the consumer and the banks against fraudulent and inflated appraisals and to protect the appraisers from being intimidated by the lender.

To protect the consumer from bate-and-switch tactics at the time of closing, the Mortgage Disclosure Improvement Act requires that a “truth in lending” document be mailed or provided to the consumer within three business days of the loan application. The loan cannot close for seven business days after the document is issued. Only a credit report can be charged for at the time of application. Appraisals or other services cannot be ordered until the fourth business day after issuance of the truth-in-lending document. If there are any changes to the loan that will cause the annual percentage rate to change by more than one-eighth of a percent, the document must be re-disclosed and the consumer must have it in their hands a minimum of three business days prior to closing. The finalization of the loan may be delayed, risking losing the property and the protected rate.

The Real Estate Settlement Procedures Act is meant to protect the consumer by requiring that loan originators provide borrowers with a standard, good-faith estimate that clearly discloses key loan terms and closing costs. It is designed to make it easier for consumers to shop for loans.

Lender Licensing and Federal Registration requires anyone providing mortgage loans to have a Colorado license, except a person employed by a federally or state-chartered bank or credit union. However, anyone providing mortgage loans, including those employed by federal- and state-chartered banks and credit unions, must be registered with the federal government.

Denise Wing, Academy National Mortgage Corporation

Definitions

• Conventional Mortgage Refers to home loans other than government loans (VA and FHA).
• Adjustable-rate Mortgage (ARM) A mortgage in which the interest changes periodically, according to corresponding fluctuations in an index. All ARMs are tied to indexes.
• Convertible ARM An adjustable-rate mortgage that allows the borrower to change the ARM to a fixed-rate mortgage within a specific time.
• Fixed-rate Mortgage A mortgage in which the interest rate does not change during the entire term of the loan.

What is the difference between a home appraiser and a home inspector?

A home appraisal is the formal process of estimating a property’s value as it relates to a mortgage loan or mortgage insurance. An appraisal does not itemize defects or reflect potential problems in the home. On the other hand, a home inspection involves an evaluation of the condition of the home’s heating, central air conditioning, plumbing, electrical systems, roof, attic, floors, foundation, and structure at the time of the inspection.